Khadi and Village Industries Commission (KVIC), has demanded Rs 525 crore
in compensation from Fabindi after suspecting it of selling 'fake khadi'.
The legal notice was issued to Fabindia at the end of January by a law firm
named Kochhar. It may be noted that KVIC has asked Fabindia to pay
financial damages for making a profit on items, using the trademark 'Khadi'
and the Khadi mark. It is also claimed that it has caused heavy financial
loss to artists associated with the sector.

The compensation was demanded by KVIC for causing "irreparable loss, harm,
and damage" to the reputation and goodwill associated with the 'Khadi'
trademark. While demand for compensation has emerged for the first time,
government-backed KVIC had notified Fabindia about the "illegal usage" as
early as July 2015, apart from accusing the retail chain of selling
products bearing a Khadi mark that was similar to its own trademark.

KVIC sent samples collected from Fabindia for lab-testing where it was
proved that the retail chain was selling factory-made cotton garments in
the name of Khadi. The same has been confirmed in multiple lab tests,
justifying KVIC's charge. There has been no response yet from Fabindia and
soon will reply. In 2016, KVIC pulled up Fabindia on finding that it had
continued to use the Khadi tag on its products. Several legal notices were
sent to Fabindia, following which the company has sought a meeting with
KVIC officials.